Consumer bill management has traditionally been an expensive process for both consumers and billers. Consumers spend several hours a month reviewing and filing bills, and coordinating payments for utility bills, credit card bills, mortgage payments, car loan payments, insurance payments, etc.
The most common method of payment of the bills is writing paper checks for the appropriate amounts and mailing the checks to the billers. Writing individual checks to pay each bill can be time-consuming and costly due to postage and other related expenses.
The current methods of bill presentment and payment are also very inefficient and expensive for the biller. It is a physical and paper intensive process, with the typical biller spending an estimated $0.75 to $1.50 to simply print and mail a consumer's bill.
Every one of the over 100 million households in the United States is in some way involved with the process of receiving, approving and paying bills. The average household receives 12 regularly occurring bills, representing a significant part of the total domestic volume of over 15 billion business-to-consumer bills created annually. The primary method consumers use to pay these bills is a paper bank check, which accounted for approximately three quarters of all non-cash payments in 1997.
Convenience is one of the primary drivers for the adoption of new consumer services today. Consumers find bill paying a time consuming, unpleasant task and there is a high level of consumer dissatisfaction with the entire process. In essence, everyone pays bills, and almost no one likes doing it.
In response to the consumer need to provide greater convenience in the bill payment process, retail banks have provided a form of online banking service that includes a bill payment function. Most of these services do not currently provide a bill presentation feature to the user. Thus, the customer will still receive the bill in the mail then enter payment amounts into the bank's system. This bill payment process is functionally equivalent to the conventional check writing process, the only difference being the elimination of the mailing of the physical check.
Another proposed solution for providing greater convenience in the bill payment process is disclosed in U.S. Pat. No. 5,832,460. U.S. Pat. No. 5,832,460 is directed to a method of electronically creating, presenting, paying and reconciling bills. In this process, the billers send electronic messages to the electronic bill presenter. The bill presenter presents the bills for a customer, and the customer indicates the bills he wishes the bill presenter to pay and the amount of payments through payment authorizations. A message is presented to the customer's bank, which then sends payment to the biller's bank. The biller's bank sends a notification to the biller. The bill presenter also sends a message indicating the reconciled payments to the biller for comparison with the payment notification message received from the biller's bank.
This bill payment process is highly dependent upon the existence of billers that send electronic bills to an electronic bill presenter. The vast majority of billers today are unable to deliver electronic bills, and the methods and industry standards for electronic bill delivery are still evolving. Additionally, some billers who are capable of electronic bill delivery are unwilling to send bills electronically. These billers want ultimate control over the electronic release of their billing information due to privacy considerations (e.g., phone bills). In other cases, billers are unwilling to commit to electronic billing due to the lack of a universal industry standard for the transmission of billing information. The fragmentation within the market dictates that a unified standards approach is unlikely to emerge, thereby limiting the pervasiveness of the electronic transmission of billing information.